As economy recovers, credit crisis might cause housing shortage

A housing shortage will likely be one more effect of the housing bubble, despite the housing market crash, foreclosure epidemic, credit crisis, massive unemployment and other hardships fade. Once the U.S housing market crashed and took the rest of the economy down along with it, banks stopped home lending, home buyers stopped purchasing and home builders stopped building. Even apartment construction has dried up. Even with a glut of housing inventory in 2010, a housing shortage in 2011 is forecast when a growing population exceeds available shelter.

Article Resource: Credit crisis will cause a housing shortage as economy recovers By Personal Money Store

Market crash shorts housing

A housing shortage in 2011 could happen as the economy recovers, jobs are created and the desire to create new households returns. CNNMoney.com reports that the nation is not building enough homes to keep up with potential demand. Just 672,000 new homes were began in April, which is less than half the long-term rate that could be needed to meet population growth within the U.S. The housing shortage, which may already exist, has been masked by the housing market crash. Job creation and home buyers will return together. Pent-up demand from customers could catch the U.S. housing market off guard, resulting in a housing shortage and rising home prices.

Housing inventory probably won't keep up

A housing shortage seems unlikely as the U.S. housing market has been having a ton of foreclosures and excess inventory. But it was reported by Forbes.com that if The US can’t regain its focus on building homes, the housing market can have a much bigger problem. Brian Wesbury, chief economist at First Trust Advisors, explained to Forbes that 1.5 million houses a year have to be built to keep up with population growth. Current inventory of new and present-day homes is plenty to support the housing market for about 7 months.

Seems like the credit crisis has handcuffed the homebuilders

The housing shortage is boosted by the credit crisis. The Los Angeles Times reports that home buyers aren’t the only real ones who experience tight-fisted banks. Builders are having a hard time borrowing the money they need to buy any kind of land, develop some lots and construct houses. Most builders aren’t starting houses today until they either do not have anything else to sell or buyers have an approved mortgage application at hand. A builder is a lot more likely to get credit now with a solid contract from somebody who has a mortgage and doesn’t have another house to sell.

Rental market shortage more serious

The housing shortage is likely to hit the rental market worse. The National Association of Home Builders reports that new multifamily construction has been crippled by the credit crisis. That leaves the industry extremely unable to meet the need for market-rate and affordable apartments that is expected to accompany economic recovery beginning next year. The two- to three-year timeline required to build apartment communities won’t be quite enough time for a large number of Generation Y professionals and newly formed households expected to need them.

Secure low rent today

The apartment shortage and increased demand will lead to increased rents. Mai Ling Slaughter at MSN.com explains to every person reading that the current market is on the renter’s side, with vacancies at a 30-year high and plenty of perks available for both current and new tenants, but it could all come to an end soon. Now may be the best time to sign an 18-to 24-month lease to lock in that low rent price.

Read a lot more on this topic here

CNN Money.com

money.cnn.com/2010/06/15/real_estate/new_housing_bubble/?npt=NP1

Forbes.com

realestate.msn.com/article.aspx?cp-documentid=23505825

Los Angeles times

latimes.com/business/realestate/la-fi-lew-20100613,,7268736.story